Bikes give me anxiety. I mean I’m not scared of them, but after cycling a ton as a kid to get around, I haven’t really ridden a bike in almost a decade. I even prefer our treadmill at home than the peloton and I couldn’t really tell you why.
I get this is irrational and also ironic. I think I’ve forgotten how to ride a bike, but of course there’s the classic saying, “it’s like riding a bike”, which basically means if I learned it once, I’ll never forget it and it shouldn’t be too hard to pick it back up again.
Now, how in the hell does this relate to subscriptions and operating your SaaS business? Well, as operators we build grooves in our brain around solving problems that are either specific—always knowing how to spin up a new marketing campaign—or general—how to approach a problem regardless of if we’ve handled it before. These grooves are the many bikes of being a successful executive.
And someone who’s ridden a lot of bikes and built a lot of mental grooves is today’s guest, David Cancel, CEO of Drift, who’s also built five other successful companies. In this interview, recorded at the end of 2019, he tells us about the current state of Drift. He shares many bike-like lessons he’s learned and had to re-learn when scaling a business. All that, and more, in this episode.
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Here we summarize the main takeaways for you to implement or hand off to your team for implementation.
What is hypergrowth?
Hypergrowth refers to reaching and maintaining a period of rapid expansion where companies experience a compound annual growth rate (CAGR) of 40 % or higher for more than a year.
Why is it important?
Reaching hypergrowth is important because companies that achieve it are able to ride up and over that “steep part of the S-curve,” as Drift describes it. It’s not easy, but they’re then able to “adapt and move quickly enough to continue onward.”
What to do today:
- Follow David Cancel.
- Schedule a time to meet with your department heads and team leads to discuss the customer-driven model and what will be needed to implement it.
What to do next quarter:
Start working toward achieving hypergrowth. It’s important to understand that hypergrowth is driven by market demand, but if the demand isn’t there, growth can still happen, but at less than 40% CAGR. You can, however, influence the market and create demand with the right strategies.
And our expert guest, David, says it begins with implementing a customer-driven model. Having started five companies, he knows a thing or two about hypergrowth—he wrote a whole book on it: HYPERGROWTH: How the Customer-Driven Model Is Revolutionizing the Way Businesses Build Products, Teams, & Brands.
To help you get started and on the right path toward hypergrowth, we’ve included David’s five ingredients for achieving hypergrowth, straight from his book. Be sure to read the entire book though, to get end-to-end knowledge on how to actually implement the customer-driven model and make these ingredients work.
Read the complete book, HYPERGROWTH: How the Customer-Driven Model Is Revolutionizing the Way Businesses Build Products, Teams, & Brands.
- Customer-Driven – This is the most important ingredient. The team has to be spending time with customers continually. They need to learn to place the customers' needs ahead of their ideas. They also need to consistently WOW customers and increase their product’s usage and adoption metrics. The entire team, especially the tech lead, should spend time with customers each week and shouldn’t try to offload this responsibility to the PM or designer because they are “busy.” They need to understand that delivering customer value and understanding customers is the best use of their time.
- Accountability – This is the ingredient that people get wrong the most. They try to have a model of autonomy with very little or no accountability built-in. Remember: Autonomy without accountability is anarchy, not autonomy Each person needs to be personally accountable for their decisions in order for autonomy to work. Finger pointing and excuses destroy autonomy. Because of this, teams should be designed to be as independent as possible (e.g. they should have a dedicated, not shared, designer).
- Transparency – The next key is to default to transparency. Individuals and teams need to over-communicate their goals, performance, ideas, and concerns with the entire company via in-person “show and tell” meetings, via the wiki, and via a public scorecard of the metrics they are responsible for.
- Iterative Approach – After accountability, this is the ingredient that most people get wrong. They interpret being customer driven as focusing only on major improvements/ features. What I have learned is that customers appreciate an incremental approach. An incremental approach shows customers that you are listening to them and making changes based on their feedback. It also turns out that most of the biggest impact items you can improve are user experience issues that are preventing a customer from using your product fully. Don’t interpret being customer-driven as being lost in weeks and weeks of customer conversations.
- Ownership – It’s critical that individuals and teams be set up to have clear ownership over a customer-facing product. Most companies get this wrong and always regress to a “pool” model where no one has clear ownership and people work across products on design/backend/ frontend tasks. We need to keep the small independent team model and never let it regress to a “shared” resource model in order for customer-driven autonomy to really work.
What to do within the next year:
Implement the customer-driven model and continually evaluate and assess the output. Ensure that you’re actually making the needed structural decisions to support it.
As David very well puts it, “The end goal is learning. Evolution is a hugely important part of being customer-driven. Your team needs to be able to move fast enough to make changes based on product usage and customer feedback -- not because something is next on a roadmap.”
Who should own this?
Department heads, team leads, and anyone that has a direct affect on the growth of the company.
Who's up next week?
Next week, we get into product-market fit with Scott Beechuk.
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This is a ProfitWell Recur production—the first media network dedicated entirely to the SaaS and subscription space.